Reporter Tomio Geron of VentureWire did a great piece this morning. Find out more about VentureWire here, or see the full article below:
TheFunded Launches Start-Up Incubator
A new start-up incubator is launching from the people behind TheFunded.com.
Just as TheFunded seeks to shake up the venture capital industry with its reviews of venture firms, founder Adeo Ressi hopes to change the model for start-up incubators with TheFunded Founder Institute.
The Founder Institute will not require on-location meetings, and provides a different model of stock compensation than other start-up incubators.
The program, which Ressi hopes will have 50 to 75 participants, will have about 17 weekly sessions, on topics such as how to hire the best people, how to know when to fire people, what's the best way to incorporate a company, and how to set up bookkeeping and record-keeping. The sessions will be taught by experienced CEOs, including Mahalo Inc. CEO Jason Calacanis. The sessions will also be broken down into working groups so that companies in similar areas can talk with each other.
Ressi said he believes it has become harder to build a startup in recent years, and he is trying to give new tools to entrepreneurs to greatly decrease the costs of starting a company.
"The Institute is designed to make a lot of the mundane challenges of growing a business easier," he said.
One of the big differences between the Founder Institute and Y Combinator is that people do not have to quit their day jobs or move to Silicon Valley to participate. They can participate online.
"I've started eight companies now," Ressi said. "Every company I started while running another company or while in a job."
This opens up the program to different entrepreneurs besides the typical profile of recent college graduates. "Some people have families to support," Ressi said. "They can't drop everything they're doing."
Ressi is encouraging - but not requiring - people who go through the program to participate in a pooling of warrants or shares. Founders will contribute 3.5% of their shares to a pool. The Institute will keep 40% of the contributed shares for operating the program as well as for potentially setting up franchises of the program in other locations.
The rest will be distributed to other founders in the program, as well as mentors who teach sessions and give advice.
"That allows for anyone in the program to actually make meaningful amounts of money from the success of their peers," Ressi said. "That really aligns healthy incentives because you want other people to succeed, so you see less concerns about confidentiality."
This also gives incentives for mentors in the program and takes away the issue of mentors having to "pick" which companies they like best, since they receive warrants in all of them.
The 3.5% at fair market value is determined by the first round of funding, even if that is a friends-and-family round.
The pooling of founders' shares is partly inspired by EB Exchange Funds, a firm that pools founders' shares into a fund, Ressi said. The founders then receive returns whenever a founder in the fund reaches a liquidity event.
The Founder Institute and TheFunded are separate companies, though Ressi uses TheFunded to find CEOs and get their input on curriculum.
Another difference with Y Combinator is that the Founder Institute is not focusing on Internet companies, and welcomes anything from biotechnology to clean technology companies.
